AIRASIA: INDEED THE SKY’S THE LIMIT!
Rizal Ahmad
This article details the development of AirAsia Malaysia from 2005 to 2008 and builds on a prior case, ‘AirAsia: The Sky’s the Limit’. Within only four years, AirAsia managed to expand its operations into another ten countries. In addition, through its associate company AsiaX, it launched long-haul low-cost air services from Malaysia to Australia and the United Kingdom. The article documents AirAsia’s marketing strategy and discusses its approach towards ‘market development’ and ‘product development’. The Blue Ocean Strategy concept is used as a tool to examine AirAsia’s strategic moves. Keywords: Low-cost airlines, budget airlines, marketing strategy, Asian entrepreneurship

In the case study ‘AirAsia: The Sky’s the Limit’, the authors Ahmad and Neal (2006) discussed AirAsia’s comeback from a debt-laden scheduled airline (US$ 10.5 million in December 2001. The airline was bought by Tune Air for a token sum of one ringgit1 or 0.26 US cents) to a proﬁtable low-cost or budget airline that managed to attract US$ 200 million in additional capital through its initial public offering in October 2004. AirAsia Berhad or Malaysia AirAsia (hereafter referred to as AirAsia) was credited for its efforts in enabling Malaysian people to travel by air to destinations in Southeast Asia at relatively low prices. AirAsia’s business model was a replication of Southwest Airlines’ low-cost model but was spruced with ‘local touches’ in terms of its marketing management practices. In December 2004, AirAsia formed a joint venture airline in
Ringgit is the Malaysian currency. It was pegged to the US dollar at the rate of 3.8 ringgit from September 1998 until July…...

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...the best business strategy. The heavy competition is also taking place in airlines industry. There are increasing number of new carriers with new business model which has changed the competition pattern in the airlines industry. O’Connel and Williams (2005) said that direct competition between full service airlines and no-frills carriers is intensifying across the world. The old business model of most airlines business focused on the full service, while the new business model focuses on using digital technology to make the business becomes more and more efficient, and thus, leading to cost advantage. Facing the digitalization era, by 2007, AirAsia had become one of the most successful budget airlines in the world. Having dominated Southeast Asia and entered China and India, AirAsia was poised to solidify its place as a top budget airline and one of the most consistently profitable globally.
AIRASIA X
Airasia X subsidiary of Airasia was founded in 2 November 2007 it’s a long-haul, budget airline based in Malaysia. The airline Airasia, is the international operation of the brand Airasia which is Asia's largest low-cost carrier. (LCC) The Airasia X is also affiliated to Virgin group and Air Canada.
Focusing on the low-cost, long-haul segment - AirAsia X was established in 2007 to provide high-frequency and point-to-point networks to the long-haul business. AirAsia X's cost efficiencies are derived from maintaining a simple aircraft fleet and a route network based on......

...AirAsia X has completely changed air travel in many ways. The airline has the ability of understanding its customers’ pulse and continues to score when it comes to customer-service delivery. Interview spoke to Azran Osman-Rani, CEO of AirAsia X, about the airline’s business model and relevant issues.
For a group that describes itself as a passionate low-cost travel loyalist, AirAsia says it always listens to its guests’ needs for lower fares and fees. Running an airline in today’s uncertain economic climate is a daunting task but AirAsia stands for its resilience. AirAsia’s low-cost, long-haul affiliate, AirAsia X, continued its growth trajectory in the fourth quarter of 2011, carrying 0.64 million passengers, an increase of 7.3 percent over the same quarter in 2010, with the same aircraft fleet.
In all, the total number of passengers carried last year touched 2.5 million (up 31.5 percent from 1.9 million passengers in 2010), and it also recorded its highest ever full year load factor of 80.1 percent (up 3.6 percentage points from 2010).
AirAsia X was able to achieve positive load factor growth and average fare growth at the same time, on all of its routes that it has operated for at least a full year. With both load factor and average fares growing positively, the carrier was able to achieve a total revenue of RM1.9 billion in 2011, a 45 percent growth over 2010. This performance, according to Azran Osman-Rani, CEO of AirAsia X, demonstrates the resilience of the......

...and high turnaround of flights, both of which add to customer convenience and greater cost efficiencies. Its turnaround of 25 minutes is the fastest in the region. In AirAsia there are no frequent flyer miles or airport lounges in exchange for lower fares. Guests have the choice of paying for in-flight meals, snacks and drinks. In addition, a decision was made in December 2004 to convert the existing fleet of ageing Boeing B737s with the higher capacity yet more fuel-efficient, reliable and cost-efficient Airbus A320s. As a result, today, the Group boasts the largest and newest A320 fleet in the region. Innovative use of technology has played a key role in AirAsia’s success story, beginning with online booking. It was the first airline in Asia to go ticketless -in March 2002 - allowing guests to pay for their bookings by credit card over the phone. Over the years, it has built on its IT platform to increase the ease of customer transactions as well as provide greater savings to the Group. In 2010, AirAsia unveiled its latest IT booking innovation in the form of New Skies, which allows customers to better manage their online bookings. With the advent of the social media, tools such as Facebook, Twitter and blogs have become integral to the Group’s customer relationship initiatives. AirAsia is, in fact, recognised as the most popular airline in the region on Facebook in terms of fan base. AirAsia is ultimately a people’s airline. This is mirrored in numerous acts of generosity......

...Airline industry heavily as in other country. In Government regulations of the Malaysian domestic and international aviation industry significantly affect financial performance of Air Asia. All aspect of Air Asia’s domestic airline operations in Malaysia, including slots allocation granting of rights under Malaysia’s air service agreements (“ASAs”) and insurance of AOCs, are subject to regulation by DCA. Aviation activity is managed by the organization within the MOT called DCA. The objective of DCA is to ensure direct service provider operates the air transportation (aviation) system is always safe for passenger.
The growth of the AirAsia’s strategy is obtained by increase the flight’s frequencies to the market that is currently serves and expanding market’s number that is serves. The growth strategy can be success depends on additional traffic right that is obtained to suitable airports located in targeted geographic markets of AirAsia.
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...Introduction
Air Asia has successfully been xpositioned itself in the market as one of the leaders in the airline industry in Asia with its technical strategies. It has a route network that spans through over 20 countries and is one of the low cost aviation services in Asia. The Business level strategy adopted by air Asia is cost leadership strategy. To gain its market share they focused on specific markets like domestic services, short and long haul regional services and selling their products below the average industry prices. Air Asia adopted a number of actions to compete in the industry. It launches the values added services which are to provide ticketless travel and implement a free seating policy. In 2007 air-Asia became the first airline in Malaysia to offer internet checking services that allowed all the passengers to print their own boarding passes and pay extra money to board first. So, by doing this the passengers can choose their seats easily. In addition, they can also pre-book their checked baggage and meals. This paper describes Air Asia’s each xstrategies that maintain its effective control of low cost/focus business level strategy. Air Asia’s structure, cultures and systems that are used to create loyalty of the customers and satisfied them to lead the organisation to be profitable. SWOT analysis is conducted to focus aspects of Air Asia and business sector. It also evaluates the current business, future prospects and the economic climate. Porter's five......

...9/25/13
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Air Asia A. Introduction 1. Objective and scope This paper will analyze the internal and external environment of Air Asia and will look into how it uses Management Information System ( MIS ), specifically its online reservation system to gain competitive advantage. And also discuss why and how important is MIS to Air Asia in running its business. 2. The Important of MIS Low Cost Carriers (LCC) business model is based on no frills service. This means that cost savings is a critical success factor in their operations. Air Asia is no different. And Aie Asia uses MIS to runc this LCC business model. So, what is MIS? MIS is the useful information to support management in an organization so that we get what we want. And MIS tool in Air Asia is the Air Asia booking system. In the competition in the airline business, booking system is the advantage for Air Asia. “The early you book the tickets, the cheaper it will be.” This early booking promotion kills two birds with one stone. It gives customers opportunity for cost savings and encourages a lof of people to......

...scheduled flights to offer bargain-basement fares. Budget airlines usually land at and take-off from secondary airports, do not provide in-flight meals or refreshments, and may not even offer numbered seat allocation. Their ticket prices are fixed and non-refundable in case of a cancellation or no-show”. (i)
3.2. Looking at the Organization
AirAsia is one of the fastest growing airline companies in the world, with a reputation as a low-cost, ‘no frills’ airline. It was originally a government owned business; yet, due to heavy debt, it was bought by former Time Warner executive Tony Fernandes in 2001, and this is where the real story begins.
Their vision, under the slogan "Now Everyone Can Fly", is “To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares”,(ii) and their mission is, under the banner of 'Affordable Airfares', “To attain the lowest cost so that everyone can fly with AirAsia,” without any compromise to Flight Safety Standards, as well as, creating a world wide recognizable brand with a ‘family’ atmosphere within working conditions for employees. (iii) These statements clearly show AirAsia’s value. Cost advantages through operational effectiveness and efficiency; coupled with strong brand marketing, go straight to the customer.
Within two years, Tony Fernandes had gained recognition with numerous awards, including ‘CEO of the Year’ by Business Times and American Express and......

...Tony did not have any experience in running an airline, nor had any capital to start one, he raised money by mortgaging his house and using up his savings. He also brought-in three of his associates that is Datuk Pahamin A. Rajab, Abdul Aziz Abu Bakar and Kamarudin Meranun to start a low cost airline in Malaysia. Tony with the three as mentioned formed a partnership and set up Tune Air Sdn Bhd and bought AirAsia for a token sum of RM1.00 with RM40 million worth of debts. AirAsia was remodeled into a low cost carrier and by January 2002, their vision to make air travel more affordable for Malaysians had taken off. Tony turned the company around, producing a profit in 2002 and launching new routes from its hub in Kuala Lumpur, undercutting the former monopoly held by the national airline operator, Malaysia Airlines with promotional fares as low as RM1.00 (US$0.27). In 2003, AirAsia opened a second hub at Senai International Airport, Johor Bahru and launched its first international flight to Bangkok.
Valued at RM2.3 billion, AirAsia is today an award winning and the largest low cost carrier in Asia. From a two aircraft operation equipped with Boeing 737-300, AirAsia currently boasts a fleet of 78 aircraft that flies to over 60 domestic
and international destinations. This airline now provides more than 500 domestic and international flights daily from six hubs domestically located at
Low Cost Carrier Terminal (LCCT) at KLIA, Senai International Airport in Johor......

...scheduled flights to offer bargain-basement fares. Budget airlines usually land at and take-off from secondary airports, do not provide in-flight meals or refreshments, and may not even offer numbered seat allocation. Their ticket prices are fixed and non-refundable in case of a cancellation or no-show”. (i)
3.2. Looking at the Organization
AirAsia is one of the fastest growing airline companies in the world, with a reputation as a low-cost, ‘no frills’ airline. It was originally a government owned business; yet, due to heavy debt, it was bought by former Time Warner executive Tony Fernandes in 2001, and this is where the real story begins.
Their vision, under the slogan "Now Everyone Can Fly", is “To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares”,(ii) and their mission is, under the banner of 'Affordable Airfares', “To attain the lowest cost so that everyone can fly with AirAsia,” without any compromise to Flight Safety Standards, as well as, creating a world wide recognizable brand with a ‘family’ atmosphere within working conditions for employees. (iii) These statements clearly show AirAsia’s value. Cost advantages through operational effectiveness and efficiency; coupled with strong brand marketing, go straight to the customer.
Within two years, Tony Fernandes had gained recognition with numerous awards, including ‘CEO of the Year’ by Business Times and American......

...1.0 Introduction
AirAsia originally was founded by government and on 2 December 2001 was bought by Tony Fernandes. AirAsia was established in year 1993. AirAsia has travel around the earth and ascend to become the world’s best in year 2001. AirAsia continues to spread out the way for low-cost aviation through the innovation, efficient and passionate approach to business with a route a network that extent through over 20 countries. There are some companies which link with AirAsia such as AirAsia X, Thai AirAsia, Philippines’ AirAsia Inc., AirAsia Japan and Indonesia.
In addition, for the vision part in AirAsia, AirAsia aims to be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares. While for the mission of AirAsia, AirAsia wants to be the best airline company to work whereby employees are treated as part of the big family. Besides, AirAsia try to maintain the lowest cost hence everyone can fly with AirAsia. Highest quality product, embracing technology to lower the cost and improvement in service levels will be maintained by the AirAsia airline also. Lastly, create a globally recognized ASEAN brand will be the mission part of AirAsia.
In the values part, AirAsia will implement trough the following key strategies which are:
* Safety
* Low fare, no frills
* Lean distribution system
* Point to point network
* High aircraft utilization
* Streamline operation
The......

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|The leading low cost airline in Asia – Air Asia has been expanding rapidly since 2001, to become an award winning and the largest |
|low fare transporter in Asia. With a fleet of 72 aircrafts, Air Asia flies to over 61 domestic and international destinations with |
|108 routes, and operates over 400 flights daily from hubs located in Malaysia, Thailand and Indonesia. To date, Air Asia has flown |
|over 55 million guests across the region and continues to spread its wings to generate broader route network through its associate |
|companies, Thai Air Asia and Indonesia Air Asia. Air Asia believes in the straightforward hassle-free, low cost business idea and |
|feels that keeping costs low requires high efficiency in every part of the business. Good organization creates savings which are |
|then passed on to guests so that reasonably priced air travel can become a reality. Through our philosophy of ‘Now Everyone Can |
|Fly’, Air Asia has sparked an uprising in air travel with more and more people around the region choosing Air Asia as their number |
|one choice of transport. As Air Asia endlessly strives to promote air travel, we also seek to create excitement amongst our guests |
|with our range of innovative and modified service. ...

...As stated in the chapter 4, in the section of business model reconstruction had explained enough on how Air Asia make their name available to customers and they can enjoy the profit without abandon the existing name which is Malaysia Airlines. Herewith, what can be explained is it still the same organization, but they changed the business to the new ones which just focusing on the new while they are not abandoning the existing business and bring in new business which there was no one as the first mover? Business model reconstruction can be explained as whenever a business is established, it either explicitly or implicitly employs a particular business model that describes the architecture of the value creation, delivery, and capture mechanisms employed by the business enterprise. Malaysia Airlines are once a privilege to fly where the firm applies entrepreneurial thinking to the design or redesign of its core business models in order to improve operational efficiencies or otherwise differentiate itself from industry competitors in ways valued by the market. And now, Air Asia are been introduced to everyone where the business come out with a new business model of Now Everyone Can Fly that lower the cost that are not necessary.
To fly, it is obviously not a need but a want. Air Asia introduced a low cost concept which enhanced travelers to easily travel without stressing their mind about money just for the accommodation which include ticketless travel, online ticket sales, no......

...costs.
3) The Foundation of Air Asia Company
Asia believes in the no-frills, hassle-free, low fare business concept and feels that keeping costs low requires high efficiency in every part of the business. Through the corporate philosophy of Now Everyone Can Fly, Air Asia sparked a revolution in air travel with more and more people around the region choose Air Asia.
In the competitive airline industry, Air Asia keeps improving their supportive and constructive management by being supportive and responsive in listening to its employee for any ideas for reducing cost. And as their philosophy “Everyone Can Fly” Air Asia its weapon to corner its other competitor is effect in reducing cost boosted Air Asia to be one of the top in low cost air carrier competition.
Air Asia is leading the way for developing low cost airlines and its promises to revolutionize the international market place. And for now, many low cost airline companies in some country have adopted the strategies innovated by Air Asia successfully
Regarding on that, Air Asia Company believe by through on their excellent regional passenger base, high levels of service quality and committed customer relationships would leaves them well positioned to continue to deliver cost savings and growth significantly to the Air Asia whilst increased profitability.
However, attaining low costs requires high efficiency in every part of the business and maintaining simplicity. Therefore Air Asia had incorporated best......

...Air Asia: The World’s Lowest Cost Airline
Air Asia is a Malaysia-based low cost airline which builds its business on the LLC model created by Southwest airlines in the U.S. Air Asia’s mission statement is to be the Asia's leading low fare no frills airline and first to introduce "ticketless" traveling. Now Everyone Can Fly clearly describes Air Asia’s value. Cost advantages created by Air Asia through operational effectiveness and efficiency go directly to the customers. The customers now enjoy much more surplus than before as the fare falls dramatically and Air Asia captures some of the ‘dead weight losses’ by capturing segments of customers that previously cannot afford the airlines’ fare.
The cost drivers in the industry are scale, technology, product and process design, input costs, and capacity utilization. The nature of the operational structure of low cost carriers provides them with initial cost advantages. This lean cost structure translates itself into high turnaround time, basic amenities, standard operating procedures and a lean distribution system
To maintain a low flight fare, Air Asia uses many sources of cost advantages. First one should be economies of scale. In many activities, increases in output do not require proportionate increases in input. This can be applied to the airline industry. Air Asia offers a single class, which allows more seats per plane. As mentioned in the case, the Boeing 737 can be equipped 12 more seats per plane in the single class...

...to compete with another competitor. Therefore, AirAsia keep changing the company strategies to meet the customer needs and wants to continuing take the leading position. This business philosophy is also help to avoid the any commercial mean that is harm to the organization and not so easy to let others company outside follow the pace of progress of AirAsia.
AirAsia, as a company that no need any other introduction in ASEAN, where connecting people and places across 132 routes, 40 of which are offered by no other airline. AirAsia is one of the award winning and largest low fare airlines in the Asia expanding rapidly since 2001. AirAsia believes in the no-frills, hassle-free, low fare business concept and feels that keeping costs low requires high efficiency in every part of the business. Through the corporate philosophy of “Now Everyone Can Fly”, AirAsia has sparked a revolution in air travel with more and more people around the region choosing AirAsia as their preferred choice of transport. From an airline with two aircraft plying six routes in Malaysia in January 2002, AirAsia has soared in the last nine years to cover 65 destinations in 18 countries. Today, employing more than 8,000 staff and with a market capitalisation of just over RM7.06 billion (as at 31 December 2010), it is the only Truly ASEAN airline, serving the region’s 600 million population from 10 hubs in three countries - Kuala Lumpur, Kuching, Penang and Kota Kinabalu in Malaysia; Bangkok and Phuket in......